Performing rights organizations (PROs) are legitimate membership groups in the music industry that manage the copyrights of songs and musical compositions on behalf of artists and music publishers. Although some see these groups as outdated in their practices, PROs help artists make money from their music or songwriting.
Nearly anyone who wants to play recorded songs, perform covers of musical works, or use a song in an advertisement needs to get a license from the PRO managing the copyright. Many businesses, like radio and TV stations, large retailers, and karaoke hosts, work with PROs to hold specific licenses to use music in specific ways.
What Happens When Music Copyright Laws Are Violated?
Some businesses have misused music – usually by accident – and have been caught breaking copyright law by employees of the PROs. The major organizations like BMI (which stands for Broadcast Music, Inc.) , ASCAP, and SESAC send investigators out across the United States to listen to music played in any commercial setting and determine if the store owner is breaking copyright law. A violation can cost up to hundreds of thousands of dollars in fines, legal fees, and penalties to the business. The cost of a fine from one PRO can close a business that is not cautious.
There are some minor exceptions to copyright laws that allow very small businesses to play music in their stores. These are often considered situations where the business may replicate a home environment in some ways.
The homestyle exemption is in play if one small radio or television is playing whatever is broadcast from that station, or if music is played at a very low volume, intended only for employees’ entertainment.
If you’re a small business owner, it can be beneficial for you to play music in your storefront, restaurant, or club – not just for your employees’ entertainment, but for your patrons as well.
However, you cannot plug in your smartphone to a small speaker, as this actually breaks copyright law.
Until very recently, most business owners had to contact PROs to purchase general licenses or blanket licenses that covered their use of a PRO’s catalogue for a specific amount of time. After that licensing contract expired, the business owner would have to re-up it or decide not to use that catalogue anymore.
Typically, to have access to popular music or a wide range of appropriate music, business owners had to purchase licenses from several PROs. If you do not follow copyright law by getting appropriate licenses to play commercial music for business, your first indication that you must pay a PRO like BMI, ASCAP, or SESAC, is receiving a letter in the mail.
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What You Can Do When You Get a Letter From SESAC, ASCAP, or BMI
If you have received this letter, it means the PRO has determined that you have violated copyright law. Unless you have evidence to the contrary, such as a license through an existing account or a commercial-specific music streaming subscription, you must pay the fine.
If a representative from BMI, SESAC, or ASCAP has made an inaccurate statement about your business’ legal ability to play music, you can:
- Prove that you are adhering to the limitations of your commercial music streaming for business service’s terms of service.
- Show your license information from the PRO you work with.
- Argue the homestyle exemption if there was only one music source in the business and the volume was low enough to meet legal requirements.
- Double-check the maximum occupancy of your business with the fire marshal since that is one part of the equation.
- Be sure to license the music used for live events like karaoke nights or DJs. As the venue owner, you are responsible for this process.
- Ask bands performing in your establishment to avoid playing covers of existing songs.
- Determine how a cover charge for live events may impact the license cost or fee.
- Consider getting a jukebox so patrons can manage their own music preferences.
Any PRO – whether it is BMI, ASCAP, SESAC, or the newer GMR – will only contact you through the mail. They will send a written letter, and that letter will have an account reference number. You can contact the PRO yourself and use this reference number to track your case and confirm its legitimacy, but they will not contact you in ways outside the postal service. They will never call you or send you an email.
If you receive a call or email from a 'PRO', you can rest assured that this is simply a scam, and that no action needs to be taken on your part.
There have been reports of scams claiming to be one of these organizations, attempting to extort money from business owners. Although you must pay the fine or answer the legal charges if you break copyright law and a PRO finds out, you do not have to do so without speaking to them first and understanding your rights as a business owner. This includes contacting them to ask for more details about your specific case.
Small Business Music Licensing Solutions
With the advent of music streaming services, the way people manage and listen to music is changing. When you’re setting up a retail sound system in your business, you cannot use a personal subscription to a music streaming service in your store, but you can search for royalty-free or copyright-free music. You can also find a commercial music streaming service that manages licenses with PROs on your behalf.
- 5 Things to Know: My Business Got a Letter From ASCAP/BMI/SESAC. (June 20, 2016). Soundstr.
- ASCAP, BMI and SESAC Force Local Coffee Shop to Shut Down Live Music. (October 29, 2014). Digital Music News.
- When Should a Small Business Pay ASCAP for BMI? (October 13, 2011). The Palo Alto Area Bar Association.
- I’ve Been Contacted by a Representative of ASCAP, BMI, or SESAC and They’re Getting Aggressive. What Should I Do? Rockbot Support.I’ve Been Contacted by a Representative of ASCAP, BMI, or SESAC and They’re Getting Aggressive. What Should I Do? Rockbot Support.
- How to Reduce Your Licensing Fees to the PROs. (June 15, 2015). Entertainment Attorney Blog.
- Music Licensing for Businesses: Real or Scam? (June 5, 2015). Easy On Hold.